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Article
Publication date: 9 May 2016

Adam Abdullah

The purpose of this research is to present an Islamic monetary theory of value by analyzing real prices and real money in terms of gold and silver in Egypt from 696 to…

1203

Abstract

Purpose

The purpose of this research is to present an Islamic monetary theory of value by analyzing real prices and real money in terms of gold and silver in Egypt from 696 to 1517, a period of 821 years from the Umayyads to the Abbasids.

Design/methodology/approach

This paper adopts a quantitative empirical investigation derived from a full population of secondary data to deductively evaluate the measure and store of value functions of money, to affirm an Islamic monetary theory of value, which is also inductively researched through a qualitative interpretation of documentary and content analysis of Islamic and numismatic literature.

Findings

The Islamic monetary theory of value leads to an Islamic equation of exchange that reconfirms the outcome of this research, where a high value of money ensures low constant real prices over the long term.

Research limitations/implications

The findings are based on an empirical investigation involving a single price of wheat series as a reasonable proxy for changes in wholesale commodity prices generally, which was successfully adopted by other studies.

Practical implications

The significance for modern monetary policy is that monetary authorities should adopt an Islamic monetary theory of value to achieve genuine monetary and price stability.

Social implications

Through an Islamic equation of exchange, price stability would ensure real economic growth that protects wealth for holders of money due to a stable purchasing power, and combined with Islamic equity finance, more efficiency in allocating investible resources to increase gross domestic product and employment.

Originality/value

The Islamic monetary theory of value ensures that there is no transfer or confiscation of wealth through inflation, which would impart gains to the issuer due to the excessive supply of money in relation to demand.

Details

Humanomics, vol. 32 no. 2
Type: Research Article
ISSN: 0828-8666

Keywords

Article
Publication date: 25 April 2022

Anwar Hasan Abdullah Othman, Mohamed Alshami and Adam Abdullah

This paper aims to investigate the linear and nonlinear interactions between the blockchain technology index and the UAE stock market index within the context of the Abu…

Abstract

Purpose

This paper aims to investigate the linear and nonlinear interactions between the blockchain technology index and the UAE stock market index within the context of the Abu Dhabi and Dubai banking sector.

Design/methodology/approach

In this study, linear analysis was performed using the generalized autoregressive conditional heteroscedasticity model (GARCH) (1,1) model, whereas nonlinear analysis was performed using the wavelet coherence model.

Findings

Based on the results of the GARCH (1) model, the authors find that the blockchain technology index has a positive significant impact on stock market returns in the Abu Dhabi and Dubai banking sector. In addition, the findings indicate that increasing blockchain integration in the banking industry decreases banks’ stock market volatility and facilitates price stabilization. Additionally, the coherence wavelet analysis reveals that there is a phase relationship between the blockchain technology index and banks’ stock market indices in the banking sector of the UAE. The association was stronger during the global pandemic crisis because they were moving together across different timescales.

Practical implications

With the help of the linear analysis, this study offers a focal point and valuable insights to policymakers, central banks and commercial banks management on how implementing blockchain technology in the banking industry help boost stock market returns, reduce volatility and facilitate price stability. As a result of the nonlinear analysis of the significant long-term degree of co-movement between blockchain technology and banks’ stock markets in UAE, policymakers or the management of banks in UAE should take the growth of the blockchain technology industry into consideration to ensure the continued development of the banking sector. For investors, the findings provide implications for portfolio managers operating in the UAE who are encouraged to take short-term co-movement into account (1–16-week horizons) through both frequency and time when designing their portfolio while keeping long-horizon periods in mind is not recommended.

Originality/value

It is a pioneering study that empirically examines the linear and nonlinear nexus between the blockchain technology index and banks’ stock market returns and price stability.

Details

Journal of Financial Economic Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 20 January 2020

Adam Abdullah, Rusni Hassan and Salina Kassim

The purpose of this paper is to provide a real asset management investment appraisal of the performance of containerships as a primary segment within international…

Abstract

Purpose

The purpose of this paper is to provide a real asset management investment appraisal of the performance of containerships as a primary segment within international shipping, to facilitate Islamic equity investment through a shipping fund. The objectives are to evaluate the risks and returns of shipping under the framework of Islamic equity finance, and to analyze the performance of investing in containerships over the long term, to appeal to retail and institutional clients of Malaysian asset management institutions.

Design/methodology/approach

Accordingly, the methodology adopts an investment analysis of a full population of historical data over a period of 20 years, to evaluate performance involving a maritime return on investment (MROI), internal rate of return (IRR), net yield and standard deviation measures of risk and return.

Findings

The findings reveal that while earnings are volatile in comparison to capital market expectations, unlevered, tax-free returns on containership investments outperform financial and other real assets.

Research limitations/implications

Shipping is a strong growth industry with about 84 per cent of global trade carried out by the international shipping industry. The problem is that many Islamic asset management institutions and investors have essentially no exposure to Islamic investment in international shipping.

Practical implications

However, shipping is a highly capital-intensive industry, and currently 75 per cent of ship lending has been conducted by European banks and financed on a conventional basis. Post-financial crisis, ship owners, ship lenders and shipyards have all been exposed to the impact of over-levered balance sheets and debt finance. There is a demand for alternative sources of finance.

Social implications

By communicating risk and reward more effectively, retail and institutional investors, as well as Islamic finance institutions, will realize that the social benefit of equity finance on the basis of profit sharing is more efficient at allocating investible resources than debt finance at interest, thereby increasing investment and economic growth.

Originality/value

The significance is that Islamic equity finance, rather than debt at the time-value of money, should enhance the development of international shipping.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 1
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 3 April 2020

Anwar Hasan Abdullah Othman, Syed Musa Alhabshi, Salina Kassim, Adam Abdullah and Razali Haron

This study uses the autoregressive distributed lag model (ARDL) econometric approach to investigate empirically the effects of cryptocurrencies, the gold standard and…

1317

Abstract

Purpose

This study uses the autoregressive distributed lag model (ARDL) econometric approach to investigate empirically the effects of cryptocurrencies, the gold standard and traditional fiat money on global income inequality measured based on the Gini coefficient, and various ratios of income inequality distribution such as top 1 per cent, top 10 per cent, top 40 per cent and top 50 per cent.

Design/methodology/approach

The study uses the ARDL econometric approach.

Findings

The findings indicated that cryptocurrency and gold standard monetary systems contributed significantly to reducing global inequality of income and wealth distribution. Conversely, the traditional fiat money system contributes positively to global income and wealth inequality while also contributing significantly to their fluctuation.

Practical implications

This suggests that the fiat monetary system results in the coercive redistribution of income and wealth if governments pursue a social welfare policy. They must resolve this conflict between the current fiat monetary system and social policy by opting for an alternative monetary system such as cryptocurrency or gold standard. These alternative monetary systems offer the promise of resolving the income and wealth inequality associated with the traditional monetary system which are accompanied with the channels of inflation, lack of financial inclusion and debt creation, and to offer a more sustainable financial system.

Originality/value

The study recommends that monetary policy must be revisited to account for its direct effect on income and wealth redistribution to achieve social welfare goals.

Details

International Journal of Emerging Markets, vol. 15 no. 6
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 14 November 2016

Nazrul Hazizi Noordin, Muhammad Issyam Ismail, Muhammad Abd Hadi Abd Rahman, Siti Nurah Haron and Adam Abdullah

This paper aims to re-evaluate and thus recommends possible ways in improving the current practice of hibah trust in Malaysia.

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Abstract

Purpose

This paper aims to re-evaluate and thus recommends possible ways in improving the current practice of hibah trust in Malaysia.

Design/methodology/approach

This study conducts a thorough and critical review on relevant literature on Islamic wealth management and estate distribution. Besides, the current practice and application of hibah trust by the Malaysian trustee companies such as Amanah Raya Berhad and As-Salihin Trustee Berhad is analyzed based on information gathered from their publications and direct consultation.

Findings

Based on the comparison made between hibah trust and its conventional counterpart, living trust, this study found that that the hibah trust product mirrors the conventional living trust, which provides a high degree of freedom to the benefactor to decide on the distribution of his wealth without taking into consideration the interest of the eligible heirs under farai’d. Nevertheless, it is undeniable that the practice of hibah trust would be able to expedite the lengthy and complex procedures of inheritance, reduce administrative costs and avoid legal impediments and inheritance tax.

Practical implications

This paper proposes a comprehensive framework for an improved asset distribution under hibah trust within the Malaysian Islamic wealth management industry by highlighting the significance of fara’id and wasiyyah rules. This proposed framework of hibah trust would become a useful reference for the policy makers in designing a dedicated regulation or legal provisions in the established laws that will govern the practice of hibah trust in Malaysia.

Originality/value

The novelty of this paper lies in highlighting the importance of adhering to the law of Islamic inheritance rules as ordained by Allah s.w.t in structuring contemporary Islamic estate planning instruments such as hibah trust, which is not evident in the current practice.

Details

Humanomics, vol. 32 no. 4
Type: Research Article
ISSN: 0828-8666

Keywords

Open Access
Article
Publication date: 30 March 2020

Sadali Rasban, Adam Abdullah and Aznan Hasan

This paper aims to examine the current practice in Singapore regarding an inheritance issue: disposal of the residual net estate to the bayt al-māl, which is identified as…

1258

Abstract

Purpose

This paper aims to examine the current practice in Singapore regarding an inheritance issue: disposal of the residual net estate to the bayt al-māl, which is identified as the Islamic Religious Council of Singapore (Majlis Ugama Islam Singapura, MUIS). The issue arises when the deceased leaves farḍ (fixed-share) heir(s) and/or dhawū al-arḥām (outer family members) but there is no ʿaṣabah (agnatic residuary heir by blood). Farḍ legal heirs are those beneficiaries for whom the Qurʾān prescribes inheritance of a pre-determined share. Disposal of the residual net estate to the bayt al-māl results in a reduction in the share due to the farḍ legal heir or worse, a total loss to the dhawū al-arḥām legal heirs.

Design/methodology/approach

A qualitative approach based on library and case study research has been adopted to elaborate practices that fall under the purview of the Administration of Muslim Law Acts (AMLA), Chapter 3.

Findings

The current practice seems biased against, especially, women and spouses. It creates high dissatisfaction in the community, especially those affected by such practices. This paper elaborates on the practice of residual net estate distribution in Singapore and the contemporary practices of the four Sunni madh-habs – the Ḥanafī, Mālikī, Shāfiʿī and Ḥanbalī jurisprudential schools – in other countries.

Research limitations/implications

In Singapore, Muslim law is defined and implemented by the civil court, not the Syariah Court or MUIS. The recommendation to change from the current classical practice by the Syariah Court and MUIS to the contemporary practice that is relevant to today’s context lies with the civil court and Government of Singapore. The choice for the Syariah Court and MUIS to adopt the contemporary practice as per Ḥanafī School by rule of the court or the government is beyond this research. Zayd ibn Thābit, Caliph Abū Bakr and a small number of companions held the view that the residue net estate asset must go to the bayt al-māl, the current classical practice. The contemporary practice adopted by Sayyidina ʿUthmān ibn ʿAffān, Jābir ibn Zayd and majority of the companions’ view, is not in favour of the residue net estate asset to go to the bayt al-māl; rather they view that it must be returned to the legal heirs.

Practical implications

Awareness in the community in the current controversial practice in Singapore when the residue net estate through the farāʾiḍ law was giving to bayt al-māl instead of returning to farḍ or dhawū al-arḥām in the absence of the ʿaṣabah legal heir as stated in the Inheritance Certificate issued by Syariah Court.

Social implications

To understand the contemporary Muslim law and the practical and just application in today’s Singapore context as supported by the AMLA, Chapter 3.

Originality/value

This is the first study that challenges the current practice by the Syariah Court and MUIS in Singapore, thereby endeavouring to restore justice to the community.

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

Article
Publication date: 14 November 2016

Adam Abdullah

This paper aims to analyze the legal interpretation of three Islamic financing products considered for approval by US authorities, from the United Bank of Kuwait and…

1163

Abstract

Purpose

This paper aims to analyze the legal interpretation of three Islamic financing products considered for approval by US authorities, from the United Bank of Kuwait and Guidance Residential, even though the USA has not enacted any Shari’ah legislation in relation to the Islamic law of transactions (fiqh mu’amalat).

Design/methodology/approach

This paper primarily adopted qualitative document and content analysis, supported by quantitative numerical analysis, in reviewing legal interpretive letters from the US Office of the Comptroller of Currency and National Administrator of Banks (OCC) and the US Department of Revenue.

Findings

The research found that in assessing economic substance over legal form, each of the three products involved risk-free transactions and interest.

Research limitations/implications

The research had access to published OCC, Department of Revenue and US Patent Office material that fully disclosed the mechanics of each of the selected products.

Practical implications

The implication for the Islamic financial institutions involves Shari’ah compliance risk. When tested against the Islamic normative theory of lawful profit, it confirms that the products are non-compliant.

Social implications

The social implication is customer awareness of Shari’ah non-compliance in the USA and the impact for other jurisdictions carrying the same products.

Originality/value

The significance of this research for Islamic banking product design and development is that it enhances the ability to block the legal means to an unlawful outcome (sadd al-dhara’i), thereby avoiding harm (al-darar) attributed to usury (riba), and upholding what is in the public interest (maslahah), to fulfil one of the objectives of the Shari’ah (maqasid al-Shari’ah), which is to protect wealth (hafiz al-mal).

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 9 no. 4
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 14 August 2017

Syammon Jaffar, Adam Abdullah and Ahamed Kameel Mydin Meera

This paper aims to discuss the opinions of current Shariah scholars on the concept of debt money in the present-day fiat money system.

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Abstract

Purpose

This paper aims to discuss the opinions of current Shariah scholars on the concept of debt money in the present-day fiat money system.

Design/methodology/approach

Research design of this paper is a quantitative investigation of Shariah experts by distributing a questionnaire to them. As majority of Shariah scholars are also Shariah advisory of the current banking system, it is important to find out their level of knowledge on the issue of debt money created by the commercial banking system through the fractional-reserve banking (FRB) system.

Findings

Based on this investigation, most Shariah scholars are unaware of and confused about the mechanics underpinning the creation of money, especially with respect to FRB as it is practiced by the conventional and Islamic banking systems.

Originality/value

Based on this research, it is recommended that these scholars should improve their understanding of the operation of the fiat money system and its consequences. It is recommended that, in future, Shariah scholars should think “outside of the box” by creating Islamic financial instruments that do not resemble those of the conventional system.

Details

Humanomics, vol. 33 no. 3
Type: Research Article
ISSN: 0828-8666

Keywords

Article
Publication date: 2 March 2018

Kamola Bayram, Adam Abdullah and Ahamed Kameel Meera

After the collapse of the Bretton Woods fixed exchange rate system in 1971, countries moved towards floating exchange rates, and the expectation was that the requirement…

Abstract

Purpose

After the collapse of the Bretton Woods fixed exchange rate system in 1971, countries moved towards floating exchange rates, and the expectation was that the requirement for foreign reserves would decrease. However, central banks currently hold more foreign exchange reserves to enhance the credibility of exchange rate policies. The demand for gold, which was the main reserve asset prior the collapse of the Bretton Woods system, has increased as a reserve asset once again following the global financial crisis (GFC) of 2008, given gold’s characteristics as a safe haven asset and a store of value. This study aims to analyse official reserves of four countries, namely, Malaysia, Turkey, KSA and Pakistan. The Black–Litterman model was used to build a new strategic portfolio with optimal allocation to gold. This study shows that all countries under the analyses should increase their gold holdings to preserve the value of the portfolio during times of financial turmoil.

Design/methodology/approach

The Black–Litterman model has been used to build a new strategic portfolio with optimal allocation to gold. The study shows that all countries in our analyses suggested increasing their gold holdings to preserve the value of the portfolio during times of financial turmoil.

Findings

The study found that countries under the analyses, namely, Turkey, Malaysia, KSA and Pakistan, suggested increasing their official gold holding given the outstanding performance of gold during the GFC.

Research limitations/implications

Research can be further extended by including few more countries from Organisation of Islamic Cooperation such as Qatar and Indonesia.

Originality/value

Emerging economies such as China, India and Russia started to sharply increase their official gold holdings in the aftermath of the GFC. According to recent statistics, central banks of China and Russia have been adding to their gold reserves. Of note, only in few European countries and in the USA, is the share of gold in foreign reserves more than 50%. In the rest of the world, this figure is about 3-5%. The paper elaborates the aforementioned subject and suggests the strategic weight of gold reserve for each country under analysis.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 11 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

Open Access
Article
Publication date: 25 June 2020

Beebee Salma Sairally

237

Abstract

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 1
Type: Research Article
ISSN: 0128-1976

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